Minimum wage increase would arrive without economic justification and would affect formal employment
Within a few days for the decision that the Ministry of Labor will take on the minimum wage increase, Semana Económica reviews its justification at a time of the labor market of greater informality and rise of underemployment. Miguel Jaramillo, senior researcher at GRADE and one of the authors of the study The deprotecting effects of employment protection, says: “90% of the labor contracts in Peru are temporary and last for an average of five months. If a firm cannot pay the minimum wage, it simply discontinues the contracts. The day a demand shock arrive, the employment will fall much faster”.
